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Volkswagen’s Errors of Emission Lead to an ObNOxious Destruction of Value

Posted by Ory Zik and Mark Bunger on Dec 1, 2015 3:36:05 PM

Volkswagen’s troubles caused by the diesel emissions cheating scandal continue to worsen. It led to an unprecedented destruction of value of about $60 billion in one week. Most recently, additional Audi and even Porsche models were found to contain software designed specifically to sabotage pollution checks, and as of this writing, some 800,000 Volkswagen vehicles may have misreported CO2 levels in gasoline vehicles as well. The widespread deployment of the diagnostics-defeating software in so many of the company’s vehicles – about 500,000 in the US, and more than 11 million worldwide – implies more than the work of a few rogue engineers, which VW executives have ridiculously pleaded. Skeptics charge that the cover-up may extend not only throughout the company but even to other carmakers, regulators, and other bodies. And even the fix that VW recently proposed – a modified air intake tube meant to improve a sensor’s accuracy, and a software fix that will correct emissions at the expense of driving performance – was met with howling criticism even in automotive industry and German media.

Clearly we have not seen the end of #Dieselgate yet.

While the scandal may not yet know boundaries and rumors still rule the news, there are a few things we know for sure: the levels of NOX, SOX and other pollutants spewed out by Volkswagen’s diesel engines was about 35 times higher than what was allowed by the US EPA.

The cheating was substantial; we have heard people claiming that the discrepancy was between European and US standards. This is not the case - VW cheated both standards, and we have made the chart below to help visualize the magnitude of this deception and explain the various regulations. US regulations limit the amount of NO2 to 0.13 g per mile; nitrous oxide is known to be hazardous to human health. Scientists have calculated that an additional 60 Americans will die prematurely, solely due to the excess admissions produced by the Volkswagen vehicles.

Lux_Quarterly_Q4_VW_Article

European regulations on the other hand are less stringent about NO2 (allowing up to 0.13 g per mile) but are stricter regarding carbon dioxide emissions which they limit to 140 g per mile. Since CO2is a known greenhouse gas that increases global warming, these regulations are better for the environment.

Whatever the fix is, it will likely be some combination of the new hardware, software, regulation, and compromise. Because as bad as this is, that’s just Volkswagen and just what is known. It’s possible, or even likely, that other carmakers will be shown to have behaved similarly (Opel, Renault, and even the Kia Soul electric vehicle are already implicated in emission trickery), or that tests in various markets are found to be erroneous, not by a few percentage points but allowing emissions many, many times greater than what was expected and explained by regulators and the public. But in the end, carmakers and regulators are sure to arrive at some compromise between economic, human health (NOx) and environmental (CO2) priorities. In fact, a proposal by the European Commission would allow new cars to “permanently exceed” EU emissions limits by up to 50%. Future linguists will have to decipher the difference between raising a limit and allowing it to be permanently exceeded; in the meantime, there’s a long road ahead before we get to cleaner transportation.

Topics: Porsche, Alternative Fuels, Volkswagen, Emissions